Firms urge gov’t to maintain PPP momentum as 2016 looms

Chris Schnabel

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Firms urge gov’t to maintain PPP momentum as 2016 looms
The private sector is gaining confidence in public-private partnership projects as the government mulls joining a China-led development bank to help narrow the infrastructure gap

MANILA, Philippines – The new administration in 2016 would have to learn a lot of the lessons from how the current administration handled public-private partnerships (PPPs), and this would take a few years, said Ramon Ang, president of San Miguel Corporation (SMC).

“To maintain momentum, I hope we bid out as many of the additional PPP projects planned as we can before the current administration ends,” Ang said in an infrastructure discussion at the Euromoney Investment Forum on March 24.

Ang said on March 23 during the SLEX-TR4 project briefing that the conglomerate is setting aside billions to put the country’s toll roads on a par with those in neighboring countries in Asia.

“We look at infrastructure as an opportunity to participate in the growth of our country. Quality infrastructure will change and impact lives,” Ang said.

The Aquino administration was initially slow but the sizes of the projects that are being bid out are growing – 9 are underway with 16 to be rolled out, said Jorge Consunji, president of DM Consunji.

“We welcome this and we hope it will continue,” Consunji said.

Consunji’s DMCI was awarded the civil works contract to complete within 18 months the elevated guideway or viaduct for the Light Rail Transit line 2 project.

Vote of confidence

The private sector’s increasing confidence in the PPPs played a significant part in the momentum.

But there are generally no power projects among the PPPs, said Eduardo Francisco, president and chief executive officer of BDO Capital and Investment Corporation.

This is because private firms can do power projects by themselves, supported by merchant banks, Francisco explained.

“Transitioning power projects to PPPs is the same – proponents are bidding without any government guarantees for profit. So the banks have gotten themselves comfortable supporting these projects,” Francisco said.

Banks are also coming up with a “staple financing,” which pre-analyzes a project and finances whoever the winning bidder is as long as it is pre-qualified, he explained.

BDO has done it for some projects and is looking at doing the same for the many projects that are coming along, Francisco confirmed.

The growing confidence the private sector has in the PPP projects was reiterated by Department of Public Works and Highways (DPWH) Secretary Rogelio Singson.

“We offered viability gap funding for all the toll roads we bid out, but no private firm took it so it’s an indication of the confidence the private sector has in these projects,” Singson said.

He also acknowledged that initially, the unsolicited mode as a method of getting PPPs bid out caused some delays, like that experienced in the North Luzon and South Luzon expressways (NLEX-SLEX) connector road project.

The government still needs to address right-of-way issues. But success would be evident if all of the PPP projects that DPWH initially lined up are bid out.

“We hope to have the remainder bid out by the middle of this year. If we close them all, we’re done as far as DPWH is concerned,” Singson confirmed.

To date, DPWH set July 7 for the issue of notice of award to the winning bidder for the controversial Cavite-Laguna expressway project.

Asian Infrastructure Investment Bank 

The current administration is also mulling joining the China-led Asian Infrastructure Investment Bank (AAIB) to help bridge the infrastructure gap in the country.

The government is gathering information on the AIIB before it makes its final decision by June, Finance Secretary Cesar Purisima said at the sidelines of the forum.

“We are part of several meetings, but the President (Benigno S. Aquino III) has not yet made a decision whether we will join or not,” Purisima said.

The Philippines, along with other countries, signed in October a non-binding agreement to become a founding member of the $50-billion multilateral institution that would finance infrastructure projects in the Asia-Pacific region.

Switzerland and Luxembourg were the latest nations to declare their intention to join the institution that is viewed by some to be a rival to the Manila-based Asian Development Bank (ADB), as well as the World Bank.

Japanese officials had previously expressed concern about the new bank’s transparency standards, while the United States is reportedly fiercely opposed to the AIIB.

Despite such, Purisima believes that the AIIB is “financial and economic in nature,” and has no relation with the territorial conflict between China and the Philippines over the West Philippine Sea. –

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